Increasing your credit score can help improve your credit utilization and help improve your buying power. However, when requesting an increase, it's important to make sure the timing is right. Here are some signs when you can increase your credit limit.
GOOD CREDIT SCORE
If you have a good credit score, this signals to creditors that you are responsible with your credit. One aspect of your credit score is your credit utilization, which is how much money you spend compared to how much credit you have available. If you already have a low utilization and increase your limit, this will decrease your utilization even more.
If you start earning more at work or get a new job that pays more, this is a good time to ask for a credit increase. Keep your salary information updated in your profile as your debt-to-income ratio plays a role in the credit limit you are given on certain cards.
If you don’t miss payments and pay your balance in full each month, this is a sign that you can handle a credit increase. Often times, your credit company will automatically offer you an increase if you have a history of making full-time payments.
LONGER CREDIT HISTORY
If your credit history is lacking when you first apply for a credit card, you may be given a lower credit limit initially. Once you’ve had a credit card for a while, it may be time to ask for an increase in your limit.
It's important to note that while a credit increase can help improve your credit utilization score (how much you are spending of your available credit), it can also be a temptation to spend more. Try and keep the amount of credit you are using below 30% of your available credit. Don't use a credit increase as an opportunity to start making crazy purchases for which you cannot pay. Often times, receiving a credit increase is a sign you are using your credit responsibly, so keep doing what you're doing.
Also keep in mind that every time you request a credit increase, an inquiry will take place on your credit and may lower your score a couple of points. So if you are planning on applying for other loans around the same time, such as a mortgage or auto loan, wait until this is completed before applying for more credit.